ECONOMIC RISK
TIM COHEN: Swift action and public explanation on KPMG needed
SA needs the Reserve Bank, the finance ministry and Irba, acting together — and quickly
Is SA sleepwalking its way into the collapse of a major audit firm, KPMG, through an overdeveloped sense of virtue signalling by essentially political actors? Or is KPMG really beyond redemption, and should South Africans plan for the demise of the local firm — even though it would increase the concentration of big auditing firms and therefore auditing costs? The problem is that there are good arguments on both sides. Let’s take the "sleepwalking" argument first. Barclays Africa on Thursday became the first major bank to boot KPMG and it did so conscious, obviously, that this could cause a kind of avalanche effect. The problem for Absa — and therefore by implication for KPMG — is that the bank is losing clients because of its association with KPMG, and this is not something the bank can really control. The balance of risk, therefore, inclines the bank to cut ties, as it has for several other organisations. That list is now getting ominously large; it now includes Foschini, Munich Re...
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